Irregular expenditure: Airports Company South Africa blows R500 million

The auditor general has slammed ACSA for failing to produce vital procurement documents.

The Airports Company of South Africa (ACSA) has been blasted by the auditor-general for failing to follow proper procurement policy, reports TimesLive.

Auditor-general (AG) Kimi Makwetu has unearthed gross financial mismanagement embattling governmental departments, municipalities and state owned enterprises. According to Makwetu, irregular expenditure has become a serious stain on the financial reports of parastatals.

Airport Company South Africa tries to explain

The latest company to fall ‘victim’ to Makwetu’s keen economic eye is ACSA, which specialises in the management of South Africa’s public airports. According to a Makwetu, ACSA failed to produce proper procurement documents for deals which amounted to R544 million.

As a result, the AG has deemed the exorbitant amount irregular expenditure – which essentially means that the company flouted due process in procurement. These terms and conditions are set by the National Treasury, to mitigate nepotism relating to government contracts. Ironically, the National Treasury itself recently recorded R770 million in irregular expenditure.

ACSA has denied any nefarious dealings relating to the irregular expenditure, instead, company spokesperson Hulisani Rasivhanga argued that procurements were made under an ‘emergency procedure’ clause and that the documents verifying this had subsequently been misplaced.

Companies fingered in the AG’s report include the controversial security company, Bosasa, which pocketed a cool R3 million. Another security provider, G4S, scored R6 million. No documentation supporting the extension of contracts could be provided.

ACSA: Payments made under ’emergency procedure’

The AG confirmed that 26 payments were made to companies but that no evidence supporting claims of contract extension or ‘emergency procedure’ could be tabled. Rasivhanga commented on the Kwenda Marketing payments, which amounted to R4 million, explaining the need to enact the ‘emergencyprocedure’ clause, saying:

“Emergency procedure is a process of sourcing which has to be undertaken on an emergency basis as a result of unforeseen circumstances that may result in Acsa’s reputational damage, critical damage to infrastructure, injury, loss of life, financial losses or environmental harm.”

The payments to Kwenda Marketing are the biggest stain on ACSA’s balance sheet, as the National Bid Adjudication Committee had already lambasted the state owned enterprise for making a R14m payment without the existence of a valid contract. These concerns stretch back to May 2018.